Seoul to inject additional W85tr into COVID-19 economic response

President Moon Jae-in on Wednesday revealed plans for 85 trillion won ($68.8 billion) worth of additional support packages to shore up the economy, including plans to create 500,000 new jobs. Speaking at an emergency economy meeting, Moon also revealed plans to roll out a South Korean version of the New Deal.

“Protecting jobs is the central task in overcoming the crisis, and it is a matter of survival,” Moon said. Saying Korea had just seen the beginning of the crisis, Moon warned of an employment shock of unprecedented scope and duration.

Moon went on to outline the additional measures the government plans to roll out.

Under plans revealed at the meeting, the government will establish a 40 trillion won fund to support key industries, expand the scale of financial measures by 35 trillion won and inject 10 trillion won to increase job security.

“Through the key industry stabilization fund, the government will prevent key industries from falling,” Moon said, adding that all possible steps would be taken to protect the industries.

However, Moon said the support would come with conditions attached.

“Responsibilities corresponding to the support will be placed on the corporations. Mechanisms (to ensure) overall employment being maintained, effort on their part, profit sharing will be established,” Moon said.

“Support will only be given under the condition of (guaranteeing) job security, and measures for preventing moral hazard -- such as limiting salaries and dividends, and prohibiting stock repurchases -- will be attached.”

Introducing plans to create jobs and increase job security, Moon said the measures will focus on preventing an employment crisis, while “dramatically reducing” blind spots in labor-related social security.

He said subsidies for companies that maintain employment will be increased, and that additional measures will be introduced for hard-hit sectors such as aviation and duty-free shopping.

In addition, a monthly subsidy of 500,000 won for three months will be given to over 930,000 individuals who have until now been unable to receive support, such as freelancers and small business owners.

Moon said the government will also create jobs to make up for weak capacity in the private sector.

“As the private sector’s capacity to create jobs is limited, the government will create 500,000 jobs. Public sector jobs and jobs for young people will be created to ease the difficulties of the people,” Moon said, adding that the public sector’s hiring process will be normalized as soon as possible.

Saying the government’s response goes beyond crisis management, Moon added that job creation projects will lay the foundation for future growth.

“By executing major state projects, the government will prepare for innovative growth in the post-corona era,” Moon said.

“Concerned ministries should quickly prepare a planning group to propel a Korean version of the New Deal.”

At the meeting, Moon also requested the National Assembly’s cooperation, asking lawmakers to quickly pass the second supplementary budget, and called on the government to make preparations for a third supplementary budget to enable the latest plans to go ahead.

By Choi He-suk (cheesuk@heraldcorp.com)